Former Provider Sues in New Mexico Mental Health Dispute

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February 29, 2016; Las Cruces Sun-News

NPQ has been long following the story of behavioral healthcare in New Mexico. Allegations of Medicaid fraud led the state in 2013 to cancel contracts with 15 nonprofit providers, causing several to go out of business. Subsequently, reviews of audits found no evidence of fraud committed by 13 of the providers, with reviews of two providers’ audits yet to be made public.

Now, La Frontera, one of the providers contracted to replace the targeted nonprofit providers, is suing Minnesota-based behemoth UnitedHealth Group’s United Healthcare and its subsidiary, OptumHealth New Mexico, for damages. La Frontera notes that OptumHealth had a four-year contract with the state of New Mexico to oversee the state’s contracts with mental health providers during the time of the Medicaid fraud allegations and cessation of contracts. The suit alleges that OptumHealth extended its state contract by six months in its own self-interest and managed the contract in such a way as deny payments to La Frontera while keeping the payments for itself during that six-month period.

LaFrontera’s key claim, from the perspective of the accused nonprofit providers, is that United Healthcare and OptumHealth sought to cover up its own mismanagement of New Mexico’s administration of Medicaid-paid behavioral health services by blaming the 15 nonprofit providers with which it had contracted. United Healthcare allegedly violated terms of their state contract by failing to build and monitor systems designed to properly identify and control fraud. The six-month extension of the four-year contract was designed to provide United Healthcare with additional revenue and implement an “exit strategy” from its contract.

United Healthcare had no comment on LaFrontera’s suit, citing its only recently having been filed.

A 2011 United Healthcare press release describes its activities in New Mexico:

UnitedHealth Group operates under the UnitedHealthcare and OptumHealth banners in New Mexico. UnitedHealthcare serves the health care needs of more than 150,000 New Mexicans, including individuals enrolled in employer-sponsored plans, as well as Medicare and Medicaid beneficiaries. UnitedHealthcare operates six offices and employs nearly 300 people statewide.

OptumHealth New Mexico employs more than 200 people across the state managing behavioral health services for the estimated 450,000 New Mexicans enrolled in Medicaid, and for the thousands of people who rely on state and federal funds for crucial services. OptumHealth has helped enhance New Mexico’s behavioral health care system by improving programs that support people with disabilities, increasing community-based programs, expanding access to care in rural areas, and increasing access and services used by Native American Tribes.

La Frontera New Mexico, with $15 million in annual revenue, has picked a fight with UnitedHealth Group, with $127 billion in revenues and the 14th largest corporation in the US, according to Fortune magazine. If La Frontera’s suit prevails, it will not only recover lost funds for the nonprofit, it will also help affix blame for the destruction of New Mexico’s Medicaid-funded behavioral health provider system.—Michael Wyland